Pawn shops have overtime made a name for themselves in the credit sector. What are they? How do they operate? Of what importance are they? What are their pros and cons? This article sheds light on what people need to know when it comes to pawn shops.
Pawn shops are businesses that provide people with loans while holding their personal property as collateral. They provide short term loans and are seen by many as the last resort value pawn near me These shops are perceived to be shady, scary places. The media has wrongly projected them as dirty and seedy. The truth, however, is that most pawn shops are in fact clean stores managed by people who take pride in providing good customer service.
The pawn shops operate very smoothly. They offer collateral based loans. This means that the loan is secured by something valuable. When a pawnbroker is interested in the item you present, he/she gives you a loan. The loan amount is likely to be a small fraction of the actual value of the item. Your item will be kept by the pawnbroker until you repay the loan. When you get the money you are issued a pawn ticket. This is a receipt for your item. It entails the terms of the loan. You can get your items back once you fully repay the loan.
Know the best things to pawn. This helps you strategize. You can pawn anything profitable though small high quality products are recommended. Items like electronics, jewelry and musical instruments are highly preferred. It is also vital that you know your item’s worth- its real worth not its sentimental value.
Some people chose to pawn their items, while others opt for bank loans. What makes a person chose one over the other? It is important that one makes a wise decision. To do that one must take into consideration the advantages and disadvantages of pawn shops. Below are just a few.
Advantages of Pawn Shops
It is a good source of quick money It is chosen by people who need small amounts of cash quickly. There is no paperwork involved and it doesn’t take a long process.
It has no credit checks or credit worries. It does not consider credit reliability or history and does not affect your credit card record if you do not pay up.
A pawnbroker requires few skills apart from estimating the value of merchandise.
Failure to repay only results in the loss of an item.
The due date can be extended.
Disadvantages of Pawn Shops
Even though the interest rate varies from shop to shop, it is relatively high.
They offer loans of small amounts.
An extension on due date results in additional fees/interests.
The loan is paid back all at once on the pay day. This lump sum repayment can make paying back difficult.